FHA Gift Information!
Minimum Requirements for FHA Gift Letters 2014
Borrowers who use gifted funds to cover their down payments and/or closing costs for an FHA loan must obtain a gift letter. This letter must be included within the loan application file prior to closing. In addition, the lender must verify the transfer of funds as explained below.
At a minimum, the FHA gift letter must include:
Those are the minimum requirements for FHA down payment gift letters in 2014, according to official HUD guidelines.
It bears repeating. The money given to the borrower must truly be a gift. The letter must clearly state that the donor does not expect any form of repayment from the borrower. In other words, it cannot be a short-term loan used to cover mortgage-related expenses. Gifts are an acceptable source of down payment and closing-cost funds for FHA loans. Short-term loans, however, are not an acceptable source. The mortgage lender must verify that the funds were not obtained through any new form of debt (i.e., a loan). If the money comes in the form of a new debt obligation, it will not be acceptable for down payment purposes.
Mortgage lenders are also required to verify the deposit and withdrawal of the gift money being used for down payment or closing costs. They typically do this by obtaining withdrawal documents, bank statements, and deposit slips that show the transfer of funds. In other words, lenders must obtain and verify the paper trail that shows where the money came from, prior to closing.
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